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The opportunity ratio – the Alpha and the Omega

12 January 2021 Grace Ormsby
Manos Findikakis

What comes first, the chicken or the egg?

The question is a metaphoric adjective describing situations where it is not clear which of two events should be considered the cause, and which should be considered the effect, and in real estate, this applies to appraisals and listings.

It’s clear that in our world, all listings are preceded by appraisals. Most categorise the presentation as either hot, warm or cold depending on the motivation and urgency of the seller. Regardless of how one decides to class it, it’s an appraisal.

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Pretty straightforward.

But let’s take one step back, before the appraisal. Let’s explore the preceding cause, the “opportunity to get into the door” in the first instance. If it’s been scientifically agreed that the “egg” came first in our chicken and egg metaphor, then having the opportunity to pitch for the business is where it begins in real estate. It’s the alpha and the omega; the beginning and the end.

So, what does that mean?

If you don’t get in the door in the first instance, i.e. have the opportunity to pitch, you’ve got no chance of winning the business. It’s what I call being “wiped out by the competition”. And you must admit, the most frustrating thing as an agent is when you see a new listing pop up in your service area that you didn’t even get a chance to present to. I can hear the ughs coming through the ethernet! Welcome to real estate!

The “opportunity ratio” is the mathematical formula which lets an agent know how good his prospecting and market presence is. The higher the ratio, the more effective that aspect of their business is. The lower the ratio, then one must evaluate the effectiveness of their prospecting and marketing strategies.

To calculate your opportunity ratio, count how many sales occurred in your core area over the past 12 months. Of those sales, determine how many you had the opportunity to appraise. Divide the appraisal number by total sales and that is your opportunity ratio.

As an example, say there were 200 sales in your service area, and say you appraised 40 of them. Note, it doesn’t mean you listed and sold 40, you just appraised 40 of them. If you weren’t successful at listing the majority, that’s a “winning the business” challenge and a topic for a future blog! The formula calculates your opportunity ratio as 20 per cent (40/200). More importantly, it identifies that you didn’t get into the door of the majority, i.e. 80 per cent or 160 sales.

Once you understand the opportunity ratio and identify those properties you didn’t get in the door to, then you can reverse engineer your prospecting activity and see how you could have “touched” those you missed, and by doing so, improve your future strategies.

The more doors you get into and “opportunities” to pitch, the more business you will eventually generate. It’s simple maths.

The detail is always in the numbers and often overlooked by most agents. But to get that competitive edge, you must get “intimate” with all your key performance indicators.

Manos Findikakis is the CEO & co-founder of the Eview Group.

The opportunity ratio – the Alpha and the Omega
Manos Findikakis 2 reb
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